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German central bank chief quits

/ Source: The Associated Press

The head of Germany's Bundesbank, Ernst Welteke, resigned Friday after coming under heavy criticism for taking a free hotel stay from a commercial bank, the central bank said.

The Bundesbank's executive council said in a statement that Welteke offered his resignation and it accepted it order to protect the central bank's reputation. The Bundesbank oversees Germany's commercial banks.

Welteke, the central bank's president since September 1999, had been on leave since last week as prosecutors and the Bundesbank investigate his New Year stay at Berlin's posh Hotel Adlon two years ago. But he had resisted thinly veiled calls for his resignation from the government.

Pressure on Welteke has grown since the weekly Der Spiegel reported two weeks ago that he let Dresdner Bank pay a 7,661 euro ($9,100) hotel bill for him and his family two years ago. The central bank head was attending a ceremony organized by Dresdner Bank to mark the introduction of euro notes and coins.

Welteke subsequently paid for two days of the four-day stay, with the Bundesbank reimbursing Dresdner Bank for the other two, saying they were working days.

As Bundesbank president, Welteke had a seat on the 18-member interest-rate setting council of the European Central Bank _ a seat that deputy Juergen Stark has filled since Welteke went on leave.

There was no immediate word on a successor, who under German law must be appointed by the government.

Speculation has centered on Stark and Caio Koch-Weser, the deputy finance minister.

Finance minister Hans Eichel steered clear of pressing Welteke explicitly to quit, but made his position clear _ saying this week that his behavior was "unacceptable" given the Bundesbank's stature as one of Germany's most venerable financial institutions.

The bank once was Europe's most powerful monetary authority as custodian of the solid German mark _ a role it turned over to the European Central Bank with the introduction of the 12-country euro currency in 1999.